This case involves a dispute over unpaid rent between Equatorial Realty Development Inc. (Equatorial) and Mayfair Theater Inc. (Mayfair). Mayfair had leased portions of a building from Carmelo & Bauermann Inc. (Carmelo) for 20 years to operate two theaters. The lease contracts contained a right of first refusal for Mayfair to purchase the properties. However, before the contracts ended, Carmelo sold the properties to Equatorial. Mayfair sued to annul the sale. The Court ruled in favor of Mayfair, rescinding the deed of sale. Equatorial then sued Mayfair for unpaid rent, claiming ownership of the properties during the period before rescission. The Court ruled against Equatorial,
Original Description:
Original Title
2. Equatorial Realty Development vs Mayfair Theater
This case involves a dispute over unpaid rent between Equatorial Realty Development Inc. (Equatorial) and Mayfair Theater Inc. (Mayfair). Mayfair had leased portions of a building from Carmelo & Bauermann Inc. (Carmelo) for 20 years to operate two theaters. The lease contracts contained a right of first refusal for Mayfair to purchase the properties. However, before the contracts ended, Carmelo sold the properties to Equatorial. Mayfair sued to annul the sale. The Court ruled in favor of Mayfair, rescinding the deed of sale. Equatorial then sued Mayfair for unpaid rent, claiming ownership of the properties during the period before rescission. The Court ruled against Equatorial,
This case involves a dispute over unpaid rent between Equatorial Realty Development Inc. (Equatorial) and Mayfair Theater Inc. (Mayfair). Mayfair had leased portions of a building from Carmelo & Bauermann Inc. (Carmelo) for 20 years to operate two theaters. The lease contracts contained a right of first refusal for Mayfair to purchase the properties. However, before the contracts ended, Carmelo sold the properties to Equatorial. Mayfair sued to annul the sale. The Court ruled in favor of Mayfair, rescinding the deed of sale. Equatorial then sued Mayfair for unpaid rent, claiming ownership of the properties during the period before rescission. The Court ruled against Equatorial,
BAUERMANN, INC. vs. MAYFAIR THEATER, INC. G.R. No. 106063 November 21, 1996 FACTS: Carmelo entered into a contract with respondent for the latter to lease !"R#$"N "% #&' ('C"N) %*""R of the two+store, b-ildin., sit-ated at C./. Recto ven-e, /anila, with a 0oor area of 1,610 s1-are meters and #&' ('C"N) %*""R N) /'22N$N' of the two+store, b-ildin., sit-ated at C./. Recto ven-e, /anila, with a 0oor area of 130 s1-are meters. #he contract is set for the ne4t 20 ,ears. 2 ,ears later, the parties entered into ,et another contract involvin.5 !"R#$"N "% #&' ('C"N) %*""R of the two+store, b-ildin., sit-ated at C./. Recto ven-e, /anila, with a 0oor area of 1,610 s1-are meters and #&' ('C"N) %*""R N) /'22N$N' of the two+store, b-ildin., sit-ated at C./. Recto ven-e, /anila, with a 0oor area of 130 s1-are meters. (tip-lated in the contract was5 #hat if the *'(("R sho-ld desire to sell the leased premises, the *'(('' shall be .iven 30+da,s e4cl-sive option to p-rchase the same. $n the event, however, that the leased premises is sold to someone other than the *'(('', the *'(("R is bo-nd and obli.ated, as it hereb, binds and obli.ates itself, to stip-late in the )eed of (ale hereof that the p-rchaser shall reco.ni6e this lease and be bo-nd b, all the terms and conditions thereof. (ometime in 1978, Carmelo thro-.h /r. !ascal b, a telephone call told the respondent that it is contemplatin. to sell the said propert, and that a certain 9ose raneta is willin. to b-, the same for :(;1,200,000. $t also as<ed the respondent if it=s willin. to the propert, for si4 to seven million pesos. Respondent thro-.h /r. >an. told the petitioner that it wo-ld respond once a decision was made. Respondent in its repl, mentioned a stip-lated part of the contract as to when Carmelo wo-ld decide to sell the propert,. Carmelo did not repl,. %o-r ,ears later, on 9-l, 30, 197?, Carmelo sold its entire C./. Recto ven-e land and b-ildin., which incl-ded the leased premises ho-sin. the @/a4im@ and @/iramar@ theatres, to '1-atorial b, virt-e of a )eed of bsol-te (ale, for the total s-m of !11,300,000.00. /a,fair instit-ted the action a 1-o for speciAc performance and ann-lment of the sale of the leased premises to '1-atorial. Carmelo=s defense5 as special and aBrmative defense CaD that it had informed /a,fair of its desire to sell the entire C./. Recto ven-e propert, and oEered the same to /a,fair, b-t the latter answered that it was interested onl, in b-,in. the areas -nder lease, which was impossible since the propert, was not a condomini-m5 and CbD that the option to p-rchase invo<ed b, /a,fair is n-ll and void for lac< of consideration. '1-itorial=s alle.ation5 that the option is void for lac< of consideration CsicD and is -nenforceable b, reason of its impossibilit, of performance beca-se the leased premises co-ld not be sold separatel, from the other portions of the land and b-ildin.. $t co-nterclaimed for cancellation of the contracts of lease, and for increase of rentals in view of alle.ed s-pervenin. e4traordinar, deval-ation of the c-rrenc,. '1-atorial li<ewise cross+claimed a.ainst co+defendant Carmelo for indemniAcation in respect of /a,fairFs claims. #rial Co-rt rendered decision in favor of Carmelo and '1-itorial. ISSUE: Ghether or not the "!#$"N C*:(' $N #&' C"N#RC#( "% *'(' $( C#:**> R$G&# "% %$R(# R'%:(* !R"H$(" HELD: Ge a.ree with the respondent Co-rt of ppeals that the aforecited contract-al stip-lation provides for a ri.ht of Arst ref-sal in favor of /a,fair. It is not an option clause or an option contract. $t is a contract of a ri.ht of Arst ref-sal. $n his *aw )ictionar,, edition of 1?97, Io-vier deAnes an option as a contract, in the followin. lan.-a.eJ contract b, virt-e of which , in consideration of the payment of a certain sum to I, ac1-ires the privile.e of b-,in. from, or sellin. to I, certain sec-rities or properties within a limited time at a speciAed price. #he r-le so earl, established in this K-risdiction is that the deed of option or the option cla-se in a contract, in order to be valid and enforceable, m-st, amon. other thin.s, indicate the deAnite price at which the person .rantin. the option, is willin. to sell EQUATORIAL REALTY DEVELOPMENT, INC., vs. MAYFAIR THEATER, INC. LG.R. No. 133?79. November 21, 2001.M FACTS: /a,fair #heater, $nc. was a lessee of portions of a b-ildin. owned b, Carmelo N Ia-ermann, $nc. #heir lease contracts of 20 ,ears C1. which covered a portion of the second 0oor and me66anine of a two+store, b-ildin. with abo-t 1,610 s1-are meters of 0oor area, which respondent -sed as a movie ho-se <nown as /a4im #heater 2. two store spaces on the .ro-nd 0oor and the me66anine, with a combined 0oor area of abo-t 300 s1-are meters also -sed as a movie ho-se O/iramar #heaterPD *ease contracts contained a provision .rantin. /a,fair a ri.ht of Arst ref-sal to p-rchase the s-bKect properties. &owever, before the contracts ended, the s-bKect properties were sold for !11,300 b, Carmelo to '1-atorial Realt, )evelopment, $nc. #his prompted /a,fair to Ale a case for the ann-lment of the )eed of bsol-te (ale between Carmelo and '1-atorial, speciAc performance and dama.es. $n 1996, the Co-rt r-led in fav! f Ma"fai!. Iarel, Ave months after /a,fair had s-bmitted its /otion for '4ec-tion, '1-atorial Aled an action for collection of s-m of mone, a.ainst /a,fair claimin. pa,ment of rentals or reasonable compensation for the defendant=s -se of the s-bKect premises after its lease contracts had e4pired. /a4im #heater contract e4pired on /a, 31, 19?7, while the *ease Contract coverin. the premises occ-pied b, /iramar #heater lapsed on /arch 31, 19?9. #he lower co-rt deb-n<ed the claim of '1-atorial for -npaid bac< rentals, holdin. that the rescission of the )eed of bsol-te (ale in the mother case did not confer on '1-atorial an, vested or resid-al propriet, ri.hts, even in e4pectanc,. $t f-rther r-led that the Co-rt cate.oricall, stated that the )eed of bsol-te (ale had been rescinded s-bKectin. the present complaint to res K-dicata. &ence, '1-atorial Aled the present petition.
$((:'J whether '1-atorial was the owner of the s-bKect propert, and co-ld th-s enKo, the fr-its or rentals therefrom HELD: N". CIVIL LA#$ PROPERTY$ CIVIL FRUIT OF O#NERSHIP$ RENTALS. Q Rent is a civil fr-it that belon.s to the owner of the propert, prod-cin. it b, ri.ht of accession. Conse1-entl, and ordinaril,, the rentals that fell d-e from the time of the perfection of the sale to petitioner -ntil its rescission b, Anal K-d.ment sho-ld belon. to the owner of the propert, d-rin. that period. SALES$ O#NERSHIP OF THE THIN% SOLD IS TRANSFERRED, NOT BY CONTRACT ALONE, BUT BY TRADITION OR DELIVERY. Q I, a contract of sale, Oone of the contractin. parties obli.ates himself to transfer ownership of and to deliver a determinate thin. and the other to pa, therefor a price certain in mone, or its e1-ivalent.P "wnership of the thin. sold is a real ri.ht, which the b-,er ac1-ires onl, -pon deliver, of the thin. to him Oin an, of the wa,s speciAed in rticles 1897 to 1301, or in an, other manner si.nif,in. an a.reement that the possession is transferred from the vendor to the vendee.P #his ri.ht is transferred, not b, contract alone, b-t b, tradition or deliver,. Non n-dis pactis sed traditione dominia rer-m transferant-r. THERE IS DELIVERY #HEN THE THIN% SOLD IS PLACED UNDER THE CONTROL AND POSSESSION OF THE VENDEE. Q L#Mhere is said to be deliver, if and when the thin. sold Ois placed in the control and possession of the vendee.P #h-s, it has been held that while the e4ec-tion of a p-blic instr-ment of sale is reco.ni6ed b, law as e1-ivalent to the deliver, of the thin. sold, s-ch constr-ctive or s,mbolic deliver,, bein. merel, pres-mptive, is deemed ne.ated b, the fail-re of the vendee to ta<e act-al possession of the land sold. )eliver, has been described as a composite act, a thin. in which both parties m-st Koin and the minds of both parties conc-r. $t is an act b, which one part, parts with the title to and the possession of the propert,, and the other ac1-ires the ri.ht to and the possession of the same. $n its nat-ral sense, deliver, means somethin. in addition to the deliver, of propert, or title5 it means transfer of possession. $n the *aw on (ales, deliver, ma, be either act-al or constr-ctive, b-t both forms of deliver, contemplate Othe absol-te .ivin. -p of the control and c-stod, of the propert, on the part of the vendor, and the ass-mption of the same b, the vendee.P ID.$ NOT PRESENT IN CASE AT BAR. Q L#Mheoreticall,, a rescissible contract is valid -ntil rescinded. &owever, this .eneral principle is not decisive to the iss-e of whether '1-atorial ever ac1-ired the ri.ht to collect rentals. Ghat is decisive is the civil law r-le that ownership is ac1-ired, not b, mere a.reement, b-t b, tradition or deliver,. :nder the fact-al environment of this controvers, as fo-nd b, this Co-rt in the mother case, '1-atorial was never p-t in act-al and eEective control or possession of the propert, beca-se of /a,fair=s timel, obKection. ID.$ E&ECUTION OF CONTRACT OF SALE AS FORM OF CONSTRUCTIVE DELIVERY HOLDS TRUE ONLY #HEN THERE IS NO IMPEDIMENT THAT MAY PREVENT THE PASSIN% OF THE PROPERTY FROM THE VENDOR TO THE VENDEE. Q %rom the pec-liar facts of this case, it is clear that petitioner never too< act-al control and possession of the propert, sold, in view of respondent=s timel, obKection to the sale and the contin-ed act-al possession of the propert,. #he obKection too< the form of a co-rt action imp-.nin. the sale which, as we <now, was rescinded b, a K-d.ment rendered b, this Co-rt in the mother case. $t has been held that the e4ec-tion of a contract of sale as a form of constr-ctive deliver, is a le.al Action. $t holds tr-e onl, when there is no impediment that ma, prevent the passin. of the propert, from the hands of the vendor into those of the vendee. Ghen there is s-ch impediment, OAction ,ields to realit, Q the deliver, has not been eEected.P &ence, respondent=s opposition to the transfer of the propert, b, wa, of sale to '1-atorial was a le.all, s-Bcient impediment that eEectivel, prevented the passin. of the propert, into the latter=s hands. ID.$ E&ECUTION OF PUBLIC INSTRUMENT %IVES RISE ONLY TO A PRIMA FACIE PRESUMPTION OF DELIVERY. Q #he e4ec-tion of a p-blic instr-ment .ives rise, . . . onl, to a prima facie pres-mption of deliver,. (-ch pres-mption is destro,ed when the instr-ment itself e4presses or implies that deliver, was not intended5 or when b, other means it is shown that s-ch deliver, was not eEected, beca-se a third person was act-all, in possession of the thin.. $n the latter case, the sale cannot be considered cons-mmated. ID.$ OBLI%ATIONS AND CONTRACTS$ RESCISSIBLE CONTRACTS$ NOT ONLY THE LAND AND BUILDIN% SOLD SHALL BE RETURNED TO THE SELLER BUT ALSO THE RENTAL PAYMENTS PAID, IF ANY. Q L#Mhe point ma, be raised that -nder rticle 1168 of the Civil Code, '1-atorial as b-,er ac1-ired a ri.ht to the fr-its of the thin. sold from the time the obli.ation to deliver the propert, to petitioner arose. #hat time arose -pon the perfection of the Contract of (ale on 9-l, 30, 197?, from which moment the laws provide that the parties to a sale ma, reciprocall, demand performance. )oes this mean that despite the K-d.ment rescindin. the sale, the ri.ht to the fr-its belon.ed to, and remained enforceable b,, '1-atorialR rticle 13?3 of the Civil Code answers this 1-estion in the ne.ative, beca-se OLrMescission creates the obli.ation to ret-rn the thin.s which were the obKect of the contract, to.ether with their fr-its, and the price with its interest5 . . . .P Not onl, the land and b-ildin. sold, b-t also the rental pa,ments paid, if an,, had to be ret-rned b, the b-,er. ID.$ SALES$ CONTRACT OF SALE$ RENTAL PAYMENTS MADE SHOULD NOT BE CONSTRUED AS A RECO%NITION OF THE BUYER AS NE# ORDER BUT MERELY TO AVOID IMMINENT EVICTION$ CASE AT BAR. Q #he fact that /a,fair paid rentals to '1-atorial d-rin. the liti.ation sho-ld not be interpreted to mean either act-al deliver, or ipso facto reco.nition of '1-atorial=s title. #he C Records of the mother case show that '1-atorial Q as alle.ed b-,er of the disp-ted properties and as alle.ed s-ccessor+in+interest of Carmelo=s ri.hts as lessor Q s-bmitted two eKectment s-its a.ainst /a,fair. %iled in the /etropolitan #rial Co-rt of /anila, the Arst was doc<eted as Civil Case No. 121370 on 9-l, 9, 19?75 and the second, as Civil Case No. 131988 on /a, 2?, 1990. /a,fair event-all, won them both. &owever, to be able to maintain ph,sical possession of the premises while awaitin. the o-tcome of the mother case, it had no choice b-t to pa, the rentals. #he rental pa,ments made b, /a,fair sho-ld not be constr-ed as a reco.nition of '1-atorial as the new owner. #he, were made merel, to avoid imminent eviction. STATUTORY CONSTRUCTION$ %ENERAL PROPOSITIONS DO NOT DECIDE SPECIFIC CASES. Q s pointed o-t b, 9-stice &olmes, .eneral propositions do not decide speciAc cases. Rather, Olaws are interpreted in the conte4t of the pec-liar fact-al sit-ation of each case. 'ach case has its own 0esh and blood and cannot be decided on the basis of isolated clinical classroom principles.P CIVIL LA#$ SALES$ VALID FROM INCEPTION BUT 'UDICIALLY RESCINDED BEFORE IT COULD BE CONSUMMATED$ CASE AT BAR. Q L#Mhe sale to '1-atorial ma, have been valid from inception, b-t it was K-diciall, rescinded before it co-ld be cons-mmated. !etitioner never ac1-ired ownership, not beca-se the sale was void, as erroneo-sl, claimed b, the trial co-rt, b-t beca-se the sale was not cons-mmated b, a le.all, eEective deliver, of the propert, sold. ID.$ ID.$ BUYER IN BAD FAITH$ NOT ENTITLED TO ANY BENEFIT$ ENTITLED SOLELY TO THE RETURN OF THE PURCHASE PRICE$ MUST BEAR ANY LOSS. Q LMss-min. for the sa<e of ar.-ment that there was valid deliver,, petitioner is not entitled to an, beneAts from the OrescindedP )eed of bsol-te (ale beca-se of its bad faith. #his bein. the law of the mother case decided in 1996, it ma, no lon.er be chan.ed beca-se it has lon. become Anal and e4ec-tor,. . . . #h-s, petitioner was and still is entitled solel, to the ret-rn of the p-rchase price it paid to Carmelo5 no more, no less. #his Co-rt has Arml, r-led in the mother case that neither of them is entitled to an, consideration of e1-it,, as both Otoo< -nconscientio-s advanta.e of /a,fair.P $n the mother case, this Co-rt cate.oricall, denied the pa,ment of interest, a fr-it of ownership. I, the same to<en, rentals, another fr-it of ownership, cannot be .ranted witho-t moc<in. this Co-rt=s en banc )ecision, which has lon. become Anal. !etitioner=s claim of reasonable compensation for respondent=s -se and occ-pation of the s-bKect propert, from the time the lease e4pired cannot be co-ntenanced. $f it s-Eered an, loss, petitioner m-st bear it in silence, since it had wro-.ht that loss -pon itself. "therwise, bad faith wo-ld be rewarded instead of p-nished. ID.$ ID.$ ID.$ ID.$ APPLICABLE IN CASE AT BAR. Q (-Bce it to sa, that, clearl,, o-r r-lin. in the mother case bars petitioner from claimin. bac< rentals from respondent. ltho-.h the co-rt a 1-o erred when it declared Ovoid from inceptionP the )eed of bsol-te (ale between Carmelo and petitioner, o-r fore.oin. disc-ssion s-pports the .rant of the /otion to )ismiss on the .ro-nd that o-r prior K-d.ment in GR No. 106063 has alread, resolved the iss-e of bac< rentals. "n the basis of the evidence presented d-rin. the hearin. of /a,fair=s /otion to )ismiss, the trial co-rt fo-nd that the iss-e of ownership of the s-bKect propert, has been decided b, this Co-rt in favor of /a,fair. . . . &ence, the trial co-rt decided the /otion to )ismiss on the basis of res K-dicata, even if it erred in interpretin. the meanin. of OrescindedP as e1-ivalent to Ovoid.P $n short, it r-led on the .ro-nd raised5 namel,, bar b, prior K-d.ment. I, .rantin. the /otion, it disposed correctl,, even if its le.al reason for n-llif,in. the sale was wron..